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Rescue deal for Cyprus reported to inch closer

A deal by international lenders to provide a shot in the arm for struggling eurozone country Cyprus has become more likely, according to a major German paper. It reported that German resistance to the rescue has waned.

The German government was in the process of dropping its reservations on a European rescue package for Cyprus, the Süddeutsche Zeitung newspaper reported on Wednesday.

It claimed that German Finance Minister Wolfgang Schäuble continued to have reservations about a bailout deal for the struggling eurozone country, but added that the pressure being exerted by euro area partners, the EU Commission and the European Central Bank had become so high that Germany would eventually be willing to play along.

Cyprus officially requested a shot in the arm in mid-2012, with initial estimates saying Nicosia would need at least 17.5 billion euros ($22.3 billion), the bulk of which would go towards rescuing the country's ailing banks.

Less money to flow?

But the Süddeutsche Zeitung reported it had become obvious that less was now needed to help get Cyprus on its feet again. According to the government in Cyprus, only 8 billion euros would be required to overhaul the banking sector.

The daily said there had been strong signals that Nicosia was now ready to carry out thorough economic reforms as a prerequisite for the bailout.

Some eurozone nations, including Germany, had in the past voiced strong misgivings about a rescue deal, suspecting Cyprus would be half-hearted in its endeavors to fight money laundering by Russian account holders in the country.